What Escrow Actually Pays For (And How to Avoid Surprises)

Escrow isn’t a fee — it’s a budgeting system.

Your lender uses escrow to collect small monthly deposits and pay your property taxes, homeowners insurance, and (if applicable) mortgage insurance on schedule. This keeps you from facing large, unexpected bills later. But because taxes and insurance can change year to year, your escrow payment can rise even with a fixed mortgage. This guide breaks down what escrow actually pays for, why your monthly payment might adjust, and the simple steps homeowners can take to avoid surprises.